At first sight, the [neo-Marxist] theory [of imperialism] seems to fit some cases tolerably well. The most important instances are afforded by the English and Dutch conquests in the tropics. But other cases, such as the colonization of New England, it does not fit at all. And even the former type of case is not satisfactorily described by the Marxian theory of imperialism. It would obviously not suffice to recognize that the lure of gain played a role in motivating colonial expansion. The Neo-Marxists did not mean to aver such a horrible platitude. If these cases are to count for them, it is also necessary that colonial expansion came about, in the way indicated, under pressure of accumulation on the rate of profit, hence as a feature of decaying, or at all events of fully matured, capitalism. But the heroic time of colonial adventure was precisely the time of early and immature capitalism when accumulation was in its beginnings and any such pressure—also, in particular, any barrier to exploitation of domestic labor—was conspicuous by its absence. The element of monopoly was not absent. On the contrary it was far more evident than it is today. But that only adds to the absurdity of the construction which makes both monopoly and conquest specific properties of latter-day capitalism.--Joseph A. Schumpeter (1950 [1943]) Capitalism, Socialism, Democracy, third edition, p.53 [emphasis added]
Schumpeter spent a good part of his life thinking about Marxism, and even wrote quite a bit about Marxist accounts of imperialism. So, it might seem unfair to him and to Marxists to focus our attention on the quoted passage which does no justice to his (and the Marxists') theoretical virtuosity. Even so, the apparent superficiality of the claim may well obscure the significance of it. And since we here at Digressionsnnimpressions, live by the Dutch proverb, wie kleine niet eert is het grote niet weerd, [google it] we embrace even the solidly superficial.
Let me do a quick set up. Liberalism and Marxism both have theories of imperialism and the way it connects to political economy, rent-seeking and militarism. The paradigmatic forms of these are offered by Hobson (the liberal) and Lenin (who stands in for Marxism here). And because Lenin explicitly drew on Hobson, this allows for some comparison and shared commitments.
Both (recall; and here) Hobson and Lenin noticed that (militaristic) imperialism and monopoly were mutually reinforcing. For Hobson (in 1902), monopoly capitalism was the effect of rent-seeking political behavior (by corrupt, imperial, financial interests). Lenin (ca 1916) didn't deny this, but he also thought that capitalism had an inevitable tendency toward monopoly and cartels, and imperialism (the search for monopoly markets overseas) is an effect of this tendency. Lenin's position doesn't just build (explicitly) on Hobson's position, but it can also grant (admittedly not in Lenin's character) that counterfactually even if Lenin were wrong about the causal arrow, Hobson lacks a political or economic solution to the problem Hobson diagnoses.
As regular readers know, (recall) my interest in Schumpeter here is motivated by Foucault's use of Schumpter in Lecture 7, The Birth of Biopolitics, 21 February 1979. There, Schumpeter represents a sophisticated version of the Leninist insight in response to Hobson. In Foucault's re-telling Schumpter agrees with Hobson that markets do not have an "inherent to the economic process of competition" tendency toward monopoly (BoB, p. 177). But the tendency is a social effect of, and caused by, the "concentration of decision-making centers of the administration and the state" (p. 177). This concentration is, itself, the effect of the kind of modernization that modern capitalism promotes (and facilitates). This makes rent-seeking easier, and also the centralized decisionmakers of administration and the state have a natural desire for counterparts in industry (to reduce coordination costs), which, in turn, facilitates an extrinsic tendency toward monopoly (and so Socialism is inevitable, alas). Schumpeter then adds for good measure that socialism while not ideal may be a price worth paying.
There is a lot more to be said about Foucault's use of Schumpeter. But it is worth noting that Foucault ignores Schumpeter's criticisms of the neo-Marxist theory of imperialism. I now see this has a huge impact on the Birth of Biopolitics because in his third lecture (of 24 January, 1979), Foucault quietly embraces (recall) a version of the neo-Marxist theory of imperialism. About that more some other time.
So, why does it matter that according to Schumpeter monopoly capitalism is responsible for imperialism. First, because as Schumpeter explicitly notes, within Marxist analysis of capitalism, monopoly is supposed to be the effect of a dynamic internal to capitalism and simultaneous with the age of imperialism (see Chapter IV of Lenin's The State and Revolution). That is it comes at the end of capitalist development. According to some (a bit less orthodox) it is supposed to be a very late stage before fascism as (recall) Karl Mannheim and/or Karl Polanyi thought (recall here; here).
By contrast, ever since Adam Smith's account of mercantilism, liberalism predominantly understands itself as an ameliorative and mitigating response to the mercantile-state and its imperial ambitions (this also comprises Bentham, Cobden, and Bright). The liberal treats mercantilism as a species of monopoly capitalism. In addition she denies that monopoly capitalism expresses the true nature of capitalism. So, here Schumpeter echoes the traditional liberal self-understanding. That Schumpeter is self-consciously echoing Smith on this point can be proved because he praises Smith's account of imperialism explicitly on the next page!
As an aside, since most students' introductions to the history of liberalism comes through J.S. Mill. And because Mill was an attenuated defender of civilizational mission of empire (and an employee of the India Company), the traditional liberal self-understanding is invisible to students (and critics) of liberalism.*
I don't mean to suggest only a traditional liberal can explain the phenomenon of early monopoly capitalism and its imperialism. Belloc, who is no liberal, can explain it just as adequately with his account of the rise of a narrow, and early oligarchy through the actions of Henry VIII and Elizabeth I.
I don't mean to suggest that this exhausts Schumpeter's criticism of the neo-Marxist account of imperialism. He goes on to argue that class struggle does worse as an explanatory feature of imperialism which he treats as exemplary in providing class cooperation among Europeans. (Although he recognizes that one might reinterpret the Marxist account by treating all the Europeans as exploiters and the natives as exploited classes.)
And I certainly don't mean to suggest a Marxist needs to capitulate at the sight of Schumpeter's argument. (Which I did suggest has a hint of superficiality to it.) A Marxist may well resists the liberal idea that there are different kinds of capitalism. And may well respond by rejecting the Leninist narrative of imperialism.
I don t think Schumpeter understood Smith. That he could not write WN until he had a theory of Society that accounted for Property from Propriety. Without “security from injury” no one has property in body, mind, and the productivity of your mind and body. As Smith says it so well in WN the rich want property to keep the poor from seizing it, but that empowers everybody and the unintended gains from specialization built on prices that reveal previously hidden reservation values. Same in Society; neighborhoods are hotbeds of local information revelation underlying reciprocity exchange and creation of social wealth. Smith’s propositions on Beneficence and Justice require common knowledge of self-interest to know what is benefit (more) and what is hurt (less). Key idea is to distinguish BEING self-interested and ACTING self-interestedly. Rules based on bottom-up self-command are the heart and soul of Liberalism/
Freedom and the English/Scotch got this right. Smith saw it all in his final critique of British colonialism in WN. His loyalty to the colonies was integral to his loyalty to the Crown.
Posted by: Vernon smith | 06/16/2022 at 03:32 PM